Can you browse the directory in windows?
If yes:
Yes, you should try and make a raw image of the CD. I would reccomend CDRWIN. There is a FAQ on psxemu.com on how to do it. This should take care of your problem if the disk is not dammaged.
If no:
You can try to boot up in ms-dos with a windows 98 startup disk. This loads up an adaptic aspi layer and asignes a drive letter to your cd-rom in dos. If you switch to that drive, and can see the contents (first type "D:\ " followed by [enter] assuming that D is your cd-rom drive. Second, type "dir" followed by [enter]) If this displays the contents of your cd-rom, you should download ForceASPI from the utilities pages on psxemu.com . This should fix your problem.
If the contents were not displayed while in dos, then your cd-rom drive cannot read CD..
If its too confusing, e-mail me and i will explain better...